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Escalating conflict in West Asia could push up to 2.5 million Indians into poverty and impact economic stability, according to a UNDP report. Rising fuel prices, higher freight costs and supply disruptions are reducing purchasing power, increasing food insecurity and straining public finances. India's strong dependence on the region for oil, fertilisers and trade makes it vulnerable to these shocks. Export delays, rising input costs and risks to the Kharif season may affect businesses and agriculture. Remittances from Gulf countries could also slow, impacting incomes, while job risks rise across key sectors, highlighting growing pressure on supply chains and economic resilience.
Escalating conflict in West Asia could push up to 2.5 million people in India into poverty and slow the country's human development progress, according to a United Nations Development Programme (UNDP) report released on Tuesday. Advertisement
The report, titled Military Escalation in the Middle East: Human Development Impacts Across Asia and the Pacific, highlights the wider economic impact of rising fuel prices, higher freight costs and supply disruptions across the region. These pressures are reducing household purchasing power, increasing food insecurity and straining public finances.
Globally, the UNDP estimates that up to 8.8 million people could fall into poverty due to the crisis, with Asia-Pacific facing potential economic losses of up to USD 299 billion.
In India, poverty levels are projected to rise from approximately 351.6 million people to about 354 million, increasing the poverty rate from 23.9 per cent to 24.2 per cent. The report notes that South Asia is expected to bear the largest share of the impact due to its exposure to price shocks and large population base.
The conflict is also expected to have a modest impact on India's Human Development Index (HDI), with a projected loss of 0.03 to 0.12 years of progress.
India's economic exposure to West Asia remains significant. The region accounts for over 90 per cent of India's oil imports, more than 40 per cent of crude supply and 90 per cent of LPG imports. It also supplies over 45 per cent of fertiliser imports, while a large share of domestic urea production depends on imported liquefied natural gas.
Trade links are also substantial, with West Asia accounting for 14 per cent of India's exports and 20.9 per cent of imports. Non-oil exports to the region are valued at around USD 48 billion, including key sectors such as basmati rice, tea, gems and jewellery, and apparel.
The report highlights potential disruptions to supply chains due to higher freight charges, insurance costs and route diversions. Export shipments from India have already faced delays in some cases.
Food security risks are also rising, particularly as any prolonged disruption could overlap with the upcoming Kharif sowing season. While current urea stocks provide a short-term buffer, continued supply issues may impact agricultural output.
Remittances remain another area of concern. Around 9.37 million Indians reside in Gulf countries, contributing nearly 38-40 per cent of total inward remittances. A slowdown in Gulf economies could affect these inflows and household incomes.
Employment risks are expected to increase, especially in sectors dependent on imports and trade with West Asia. Small and medium enterprises in industries such as construction materials, food processing, hospitality, steel and gems may face higher costs and reduced orders, impacting jobs and business continuity.
The report also notes rising input costs in sectors like healthcare, with raw material prices for medical devices expected to increase significantly, alongside higher wholesale medicine prices.
Despite the challenges, the UNDP highlights the need for strengthening supply chains, diversifying energy sources and enhancing social protection systems to improve long-term economic resilience.
Source: PTI
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